A volatile market is no hindrance to investor Warren Buffett, who said Monday that he expected stock prices to be “a lot higher” in the future.
Buffett made that assessment while on CNBC, speaking with anchor Becky Quick. As Business Insider notes, the Berkshire Hathaway CEO was queried about his feelings regarding the major price swings observed in some equities around the Q2 earnings season. Buffett, a famed value investor, took the opportunity to reiterate his long-term stance when it comes to the stock market, saying that he expected equities prices to grow substantially over time.
— Twistools (@twistools_en) August 10, 2015
“Stocks are going to be higher,” Buffett said, particularly 10 to 20 years in the future.
The Omaha native compared stock ownership to home ownership, asserting that a price depreciation of 5% is hardly likely to convince homeowners to sell their property, even in hopes of buying it back at a lower price. The same, Buffett noted, is true of stocks.
— Henry Blodget (@hblodget) August 10, 2015
The comments come on a day in which Berkshire Hathaway announced a major deal, with the acquisition of Precision Castparts, an aerospace parts manufacturer. The deal is reportedly Buffett’s biggest ever, coming with a price tag of $37.2 billion, far eclipsing the firm’s previous record purchase of Burlington Northern Santa Fe railroad in 2010, which cost Berkshire $26.5 billion. Speaking on CNBC, Buffett noted that the deal would effectively take Berkshire Hathaway out of the market for another major purchase in the short-term future, as Reuters reports.
“This takes us out of the market for an ‘elephant’ for 12 months or so… but we will be buying a few small things in the next six months,” Buffett noted.
— Overnewser – Economy (@economyovernewz) August 1, 2015
Berkshire reportedly offered Precision Castparts $235 per share, a 21.2 percent premium over its Friday closing price, which stood at $193.88. On news of the Berkshire acquisition, the company’s share price jumped in pre-market trading, reaching $230.85 before Monday’s opening bell.
Buffett recently celebrated his 50th year at the helm of Berkshire Hathaway, as the Inquisitr previously reported. The CEO noted that Berkshire would use $23 billion of its own cash to finance the deal, borrowing the rest of the required funds. This move would leave the firm with $40 billion in cash on hand, prompting Warren Buffett to note that he always prefers to keep a sizable amount of cash available at all times.
[Photo by Dimitrios Kambouris / Getty Images]